Perspectives on Corporate Citizenship

Jörg Andriof, Malcolm McIntosh

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781874719397
• eBook ISBN: 9781351282345
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A number of disparate but interconnected forces such as deregulation and globalization, rapid advances in communications technology and the rise in the power of the consumer and civil society have now combined to bring corporate responsibility to prominence in many corporate boardrooms. In this information age, the ramifications of not addressing best practice in environment, workplace, marketplace and community could range from bad press coverage to complete market exclusion. These are perilous times for the social construct of modern capitalism.In today's society successful companies will increasingly be those that recognize that they have responsibilities to a range of stakeholders that go beyond compliance with the law. If in the past the focus was on enhancing shareholder value, now it is on engaging stakeholders for long-term value creation. This does not mean that shareholders are not important, or that profitability is not vital to business success, but that in order to survive and be profitable a company must engage with a range of stakeholders whose views may vary greatly. If in the past corporate social responsibility was simply seen as profitability plus compliance plus philanthropy, now responsible corporate citizenship means companies being more aware of and understanding the societies in which they operate. This means senior executives and managers being able to deal with a wide range of issues including greater accountability, human rights abuses, sustainability strategies, corporate governance codes, workplace ethics, stakeholder consultation and management.The aim and scope of Perspectives on Corporate Citizenship is to help capture and distil these and other emerging trends in terms of content, context and processes, in one concise volume. With contributions from the *crème de la crème* of leading thinkers from around the world, Perspectives on Corporate Citizenship is essential reading for students, scholars and all serious thinkers on one of the most critical issues of our time.

Part 1
Evolution, Context and Concepts of Corporate Citizenship

1
Integrity and Mindfulness

Foundations of corporate citizenship^*

Sandra Waddock

Boston College, Carroll School of Management, USA

Debate rages about whether there is a ‘new’ economy and, if so, what the implications are for the corporate citizenship of large corporations. The ‘new economy’ is technologically sophisticated (and technologically driven), entrepreneurial, incredibly fast-paced, and global. It demands integration internally and externally, through electronic technology as well as organisationally in terms of internal systems, and across organisational and industry boundaries. Potentially, this new economy outdates traditional views of the dynamics of the business cycle (e.g. Greenspan 1998; Hamel 1998; Economist 1999e; D’Andrea Tyson 1999; Sahlman 1999). Some have characterised the current business climate as hyper-turbulent (D’Aveni 1994), while others claim that only world-class organisations can succeed (Kanter 1995) in such highly competitive and dynamic contexts.

Whether or not the new economy actually exists, what is clear is that current economic and industry conditions certainly demand new and different ways for companies to relate to their stakeholders if they hope to succeed. Issues of ecological sustainability, transparency and accountability, human rights and labour relations (especially in sourcing from less developed areas of the world), and corruption are topics that face global companies and their leaders on a daily basis. Stakeholders representing these and other varied interests, particularly the interests of primary stakeholders such as owners, employees, customers and suppliers, frequently seek interaction with—and action from—company leaders regarding their specific issues.

Most corporate leaders today would probably attest to emerging dynamics of change and integration that focus ever-greater attention on company activities that have traditionally been conducted behind closed doors. Externally, demands for greater accountability, transparency and dialogue with stakeholders in multiple arenas are mounting. Information on corporations’ stakeholder-related and citizenship practices has become increasingly available to interested parties, through rating systems developed by social investors and activists, as well as governmental release of ecological information, such as the Toxic Release Inventory, not to mention the attention of the broadcast and print media.

As the 1999 World Trade Organisation controversy in Seattle aptly illustrates, activists have learned how to use the Internet as an informational and organising tool to focus attention on labour, human rights and environmental practices that they find troublesome. These tools and analyses mean that information about company practices is easy to disseminate to interested audiences. Interested stakeholders can readily find out about many corporate practices—accurately or not—that were once (and sometimes still are) well behind the corporate veil. It also means that establishing sound relationships between companies and their primary and critical secondary stakeholders, i.e. those groups that constitute the company and have the power to affect its operations, are under a spotlight as never before.

The rapid pace of technological change combines with the growing activism and sophistication of some external stakeholders with whom companies might once have had little contact. For example, activists in Seattle did much of their organising using electronic communication; these activists included human rights activists, labour groups and environmentalists, among others interested in corporate (and country) accountability. Similarly, new organisations focused on improving country and corporate practices and decreasing corruption, such as Transparency International, now demand greater transparency and openness with respect to corporate practices in the global arena.

Other organisations regularly rate aspects of corporate citizenship (traditionally called corporate social responsibility). Such organisations include the Council on Economic Priorities, Kinder, Lydenberg, Domini, ethical/social investors, investment firms such as Calvert and Trillium, and other parties, such as the Social Investment Forum, an association of social investors. Similarly, the Reputation Management research group at New York University, headed by scholar Charles Fombrun, is finding new ways to assess corporate reputation and link reputation to financial performance. In the UK, organisations such as Sustain-Ability, AccountAbility, the New Economics Foundation and Business in the Community focus on improving what has come to be called the ‘triple bottom line’ of corporate financial, ecological and social performance.

What does all of this attention to corporate citizenship mean for companies and those who lead them? Arguably, the implications are significant. In what follows, I will argue that leading corporate citizens need new levels of mindfulness and integrity at the individual and organisational levels if they are to be able to develop constructive relationships with key stakeholders. Relationships with stakeholders constitute the essence of corporate citizenship. Simultaneously, integrity and mindfulness are problematic in that they pose significantly new demands for developing both individual leaders and companies. The reasoning behind these ideas is laid out below.

◢ Operating with integrity

A foundational argument in this chapter is that integrity—in the full sense of the word—is at the core of good corporate citizenship. The primary synonym for integrity is honesty, according to Webster’s dictionary. Honesty means honesty with both self and the other stakeholders with which the company deals. Being honest with oneself means exploring what the realities are, knowing who or what one is, and acting forthrightly, consistent with that knowledge. Integrity, at its most basic level, therefore, means living up to a set of standards and principles, which implies a deep respect for others, that is, for the stakeholders who are affected by the corporation’s actions (or, alternatively, who can affect the corporation) (Freeman 1984).

Webster’s offers three definitions of integrity, which are relevant to the present discussion. One definition is ‘firm adherence to a code, especially of moral or artistic values’, with the synonym of incorruptibility. Second is soundness or an unim-paired condition. Third, and directly related to the second, is that integrity relates to the state of being complete or undivided, that is, to wholeness. The next sections will elaborate on these definitions as they apply to corporate citizenship.

Firm adherence to a code

Adherence to a code suggests a values-driven basis for corporations attempting to act with integrity. Corporate citizenship is, if nothing else, based on a combination of standards and what I have elsewhere termed ‘constructive values’, that is, positive values that guide behaviour. This adherence to a set of values is at the centre of the definition of corporate citizenship used here. It suggests that developing corporate citizenship is more art than science (and is, as well, artistic) in that it needs to be fundamentally values-driven, but in a constructive or positive way.

What types of value can be considered ‘constructive’? For an answer to this question, we turn to the seminal work on leadership by James McGregor Burns (1978). Burns says that values can be end values and modal values. The sorts of value that are ‘constructive’, that is, positive guides for behaviour, are, by Burns’s definition, end values in that they describe desirable end states, collective goals or explicit purposes that help to establish standards for making choices among a set of alternatives. Notice that the term ‘end values’ combines identifying an explicit goal that defines core purpose with the standards (the code) that must be lived up to so that goal can be attained.

The work of James Collins and Jerry Porras in their book Built to Last provides some insight into the content of end values that may be appropriate in developing corporate citizenship (although these authors state that the types of value companies have do not matter, I will here respectfully disagree). Collins and Porras (1997) studied what they called ‘visionary’ companies to determine on what basis their long-term success was built. Consistent with the view of corporate citizenship in this chapter, the researchers found that visionary companies succeeded far beyond the also very successful comparison companies. Visionary companies, Collins and Porras found, developed ‘core ideologies’, consisting of clearly identified vision or purpose and the set of core values that sustains and supports the vision over a relatively long time-period. They were also guided in the shorter term by BHAGs, that is, big hairy audacious goals.

End values are deeply felt core values, which inspire the human spirit. It is exactly this type of value that appears in the visionary companies studied by Collins and Porras. For example, American Express’s core ideology involves ‘heroic customer service, worldwide reliability of services and encouragement of individual initiative’, while Marriott’s focuses on friendly service and excellent value, treating people with respect, hard work combined with fun, continual self-improvement and overcoming adversity. Similar end values are evident in all of the visionary companies studied by Collins and Porras (1995: 68-71). Clearly, the values articulated and implemented by these companies have intrinsic merit and are of a nature that many, if not most, people (whatever their cultural, ethnic or religious heritage) can agree serve as inspirational bases for guiding behaviour.

Core ideology serves the purpose of guiding a firm, as the definition ‘adherence to a code’ proposes. Specifically, end values help companies to operationalise their values in their day-to-day practices by providing the ‘how we do things around here’ set of standards needed to determine what is and what is not appropriate in a given situation or with respect to a particular stakeholder. Freeman and Gilbert (1988) have called such a guiding set of values an enterprise strategy and suggested that the key question ‘What do we stand for?’ should be asked along with the fundamental strategic question ‘What business are we in?’ Asking, answering and implementing the enterprise strategy question would arguably go a long way towards developing integrity, defined as adherence to a code, in corporate citizens.

Soundness and wholeness

These two definitions of integrity are discussed together because they are closely related. Integrity with respect to a corporate citizen indicates soundness, in the sense that an organisation’s condition is unimpaired and healthy. To the extent that the organisation has integrity, it is complete, not fragmented, whole in and of itself. It is, in short, integrated, which implies that its systems work together towards the common purpose identified by the vision and end (core) values of the core ideology.

Sound organisations, then, are healthy, meaning that all aspects are working well—and to the extent they are actually integrated, they are working together systemically. Soundness, in this sense, implies fiscal stability as well as, for private-sector organisations, profitability. Additionally, soundness implies the solidity or security that is provided by having internal practices that respect the stakeholders affected by those practices, that do not permit corruption to enter into the system, similar to the notion of adherence to a code or set of principles, discussed above.

Systems, notably, are wholes. More accurately, as Ken Wilber (1996) points out, they are, in Arthur Koestler’s word, holons. Holons are simultaneously both wholes and parts. Corporate citizens—all organisations, for that matter—are also holons, in the sense that they are whole systems, have integrity, in and of themselves. But, simultaneously, they are inextricably embedded as parts of a broader system, i.e. of an industry in which they are in competition with other similar organisations, which is itself part of a broader economic system. More to the point, as holons, corpor...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• CONTENTS
• Foreword
• Introduction
• PART 1: Evolution, Context and Concepts of Corporate Citizenship
• PART 2: Governance and Leadership of Corporate Citizens
• PART 3: Stakeholder Engagement and Social Accountability
• Bibliography
• List of abbreviations
• Author biographies
• Index